Charles R. Bowden and Sue I. Bowden - Page 2

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                  1 50 percent of the interest due on $41,891.                                         
                  All section references are to the Internal Revenue Code in                           
            effect for the years in issue, and all Rule references are to the                          
            Tax Court Rules of Practice and Procedure, unless otherwise                                
            indicated.                                                                                 
                  After concessions, the issues remaining for our                                      
            consideration are:  (1) Whether petitioners are entitled to                                
            depreciation deductions of $154,986 and $207,060 for their 1986                            
            and 1989 taxable years, respectively; (2) whether petitioners are                          
            entitled to other Schedule C deductions for 1986 and 1989;                                 
            (3) whether petitioners failed to include income of $163,001 and                           
            $72,817 received during their 1986 and 1989 tax years,                                     
            respectively; (4) whether petitioners are liable for self-                                 
            employment tax on any part of the $163,001 and $72,817 amounts;                            
            (5) whether petitioners are liable for an addition to tax for                              
            negligence under section 6653(a)(1)(A) and (B) for 1986 and the                            
            accuracy-related penalty under section 6662(a) for 1989; (6)                               
            whether petitioners are liable for the substantial understatement                          
            addition to tax under section 6661 for 1986, and (7) whether                               
            petitioners are liable for the late filing addition to tax under                           
            section 6651(a)(1) for 1986 and 1989.1                                                     

                  1 The notice of deficiency reflects an investment tax credit                         
            carryforward issue involving $98,660 for 1986.  Since the time of                          
            the pleadings, the parties have not addressed this issue.                                  
            Therefore, for purposes of this case, the investment tax credit                            
                                                                         (continued...)                




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